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| Best Commodities house: Deutsche Bank |
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| Also shortlisted: Goldman Sachs and Société Générale CIB |
Investment banks’ commodities businesses were caught in a perfect storm in the past year as new financial regulations, falling commodity prices and low volatility conspired against them, adversely affecting revenues and accelerating change.
Basle III, Dodd-Frank, European Market Infrastructure Regulation and the Volcker Rule form the regulatory onslaught forcing a fundamental shift in commodities trading, and at a time when the commodities supercycle has hit the skids.
Banks including Citi and Goldman Sachs have already called an end to the decade-long supercycle, primarily because the economy in China, the largest importer of raw materials, has slowed and the country is shifting to consumer-driven growth.
The benchmark Standard & Poor’s GSCI Index of 24 raw materials fell 2.5% this year after almost quadrupling in value since 2001.
Banks have therefore had to be swift to adapt to this new regulatory and market environment, forcing many to re-engineer their businesses, cut proprietary trading and refocus on providing financing, hedging and investment solutions to clients.